The 501 S(c)ene

The latest view on not-for-profit accounting issues

Nonprofit board governance best practices

As part of their regular policies, non-profit organizations may want to consider following these board governance best practices.

Whistleblower policy – The benefit of having a whistleblower policy in place is that it encourages staff and others to come forward with any information they have related to fraud or illegal activity. These policies allow those to come forward with protection, and without fear of retaliation. Additionally, these policies signal organizations are open to hearing concerns and complaints. Nonprofit organizations are asked on Form 990 if they have a written whistleblower policy.

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Disaster recover policy – The benefit of having a disaster recovery policy in place is if the unthinkable happens (such as an 18-month + pandemic), the nonprofit has a plan in place to continue operations. These policies can help an organization before, during and after a disaster that affects the organization. The following procedures are typically included in in a disaster recovery plan: how to retrieve data if lost, how to communicate to staff and board members about the disaster and how to get the organization running again.

Conflict of interest policy – The benefit of having a conflict of interest policy is that the board and employees know how to manage conflicts of interest, if applicable. Best practices are for employees and the board to review the conflict of interest policy and consider whether updates are needed on an annual basis. Additionally, nonprofit organizations are not only asked on the Form 990 if they have a conflict of interest policy, but also are required to describe how the organization manages and monitors any potential or actual conflicts.

Document retention policy – The benefit of this policy is that staff and the board are aware of what documents they should continue to maintain and what documents should be destroyed after a set time period. Nonprofit organizations are also asked on the Form 990 if they have a written record retention policy.

The Form 990 asks about these policies in Part VI.  A nonprofit organization should also consider consulting with a non-profit attorney when putting these policies in place.

If you have any questions, please contact your Henry+Horne advisor.

Elizabeth Stoy

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